Introduction to Global Marketing Chapter 1 Global Marketing

Reasons for Global Marketing Growth Access to new markets Access to resources Survival Against competitors with lower costs (due to increased access to resources) Keegan and Green, Chapter 1

Global Marketing Vs. Marketing Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals. Global marketing focuses on global market opportunities and threats. Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Globalization Globalization is the inexorable integration of markets, nation-states, and technologies to a degree never witnessed before - in a way that is enabling individuals, corporations, and nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is enabling the world to reach into individuals, corporations, and nation-states farther, faster, deeper, and cheaper than ever before. Thomas Friedman Keegan and Green, Chapter 1

What is a Global Industry? An industry is global to the extent that a company’s industry position in one country is interdependent with its industry position in another country Indicators of globalization: Ratio of cross-border trade to total worldwide production Ratio of cross-border investment to total capital investment Proportion of industry revenue generated by companies that compete in key world regions Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Keys to Global Success Value creation Competitive advantage Focus Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Value Creation Value = Benefits/Price Price is a function of money, time, and effort Benefits result from the product, promotion, and distribution 2 methods of value creation Improved benefits Lower prices Keegan and Green, Chapter 1

Competitive Advantage Success over competition in industry at value creation Achieved by integrating and leveraging operations on a worldwide scale Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Focus Concentration and attention on core business and competence Nestle is focused: We are food and beverages. We are not running bicycle shops. Even in food we are not in all fields. There are certain areas we do not touch…..We have no soft drinks because I have said we will either buy Coca-Cola or we leave it alone. This is focus. Helmut Maucher Keegan and Green, Chapter 1

Globalization or Global Localization? Developing standardized products marketed worldwide with a standardized marketing mix Essence of mass marketing Global localization Mixing standardization and customization in a way that minimizes costs while maximizing satisfaction Essence of segmentation Think globally, act locally Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Where in the World? How does a company decide which markets to enter? Company resources Managerial mind-set Nature of opportunities and threats in that market Keegan and Green, Chapter 1

Examples of Global Marketers Coca-Cola Philip Morris Daimler-Chrysler McDonald’s Toyota Ford Unilever Gillette IBM USA Germany Japan UK/ Netherlands Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Why Go Global? For US-based companies, 75% of sales potential is outside the US. About 90% of Coca-Cola’s operating income is generated outside the US. For Japanese companies, 85% of potential is outside Japan. For German and EU companies, 94% of potential is outside Germany. Keegan and Green, Chapter 1

Management Orientations Ethnocentric Polycentric Regiocentric Geocentric Keegan and Green, Chapter 1

Ethnocentric Orientation Assumes home country is superior to the rest of the world; associated with attitudes of national arrogance and supremacy Management focus is to do in host countries what is done in the home country Sometimes called an international company Products and processes used at home are used abroad without adaptation Keegan and Green, Chapter 1

Polycentric Orientation Management operates under the assumption that every country is different; the company develops country-specific strategies Sometimes called a multinational company Company operates differently in each host country based on that situation Opposite of ethnocentrism Keegan and Green, Chapter 1

Regiocentric Orientation Region becomes the relevant geographic unit (rather than by country) Management orientation is geared to developing an integrated regional strategy European Union NAFTA Keegan and Green, Chapter 1

Geocentric Orientation Entire world is a potential market Managerial goal is to develop integrated world market strategies Global companies serve world markets from a single country and tend to retain association with a headquarters country Transnational companies serve global markets and acquire resources globally; blurring of national identity Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Driving Forces Regional economic agreements Market needs and wants Technology Transportation and communication improvements Product development costs Quality World economic trends Leverage Keegan and Green, Chapter 1

Keegan and Green, Chapter 1 Restraining Forces Management myopia Organizational culture National controls Keegan and Green, Chapter 1